Kienbaum v. Rathfon Reduction Works
Kienbaum v. Rathfon Reduction Works
Opinion of the Court
Some time prior to March. 10, 1908, the county of Ferry became the owner, through tax foreclosure proceedings, of two certain mining claims, situated within its boundaries. On the day named, it leased the property to one Richard Mulroy for a term of two years, the lease providing that Mulroy should mine the property, ship and smelt the ores so mined, and turn over to the county a certain percentage of the smelter returns. The lease also granted Mulroy an option to purchase the property for a stated consideration, agreeing that the sums received as royalties should be credited on the purchase price if the option was exercised. Mulroy assigned his interests in the lease to one J. L. Harper, and Harper in turn assigned to a corporation known as the New Republic Company.
The option to purchase was not exercised by the lessee or his assigns, and on March 3, 1910, the county entered into an agreement with the New Republic Company for a sale of the property. In this agreement, the purchaser agreed to pay for the property the sum of $29,075.83, in the manner following: It agreed to enter into and hold possession of the property; operate the same; ship and smelt the ores taken from the mine; pay to the county a certain percentage of the net smelter returns for the first year, an increased percentage of such returns, for the first half of the second year, a further increased percentage, for the second half of the second year; and at the end of the second year, to pay to the county such balance of the purchase price as remained, after crediting thereon the sums received from the smelter returns; the county agreeing to deed the property to the purchaser or its assigns on the payment of the purchase price.
On January 7, 1914, the note and account mentioned were unpaid. The Rathfon Reduction Works seemed, also, to be unable to satisfy the county that the obligation remaining due to it on the purchase price of the property would ultimately be paid. This condition led to the following agreement between the appellants in the present action, who were then stockholders in the Rathfon Reduction Works, and that corporation, namely:
“Agreement for which, for valuable consideration, the receipt whereof is hereby acknowledged, Fred Kienbaum, John Hollis and F. B. Babcock, parties of the first part and the Rathfon Reduction Works, a corporation, party of the second part, agrees each for himself, his heirs or assigns, to be firmly bound by these presents as follows, to wit :
“The parties of the first part undertake and agree that, on or before March 1st, A. D. 1916, they will pay or cause to be paid to the treasurer of Ferry county, all of the amount due and necessary to fully satisfy the requirements of the present lease and bond, thereby completing title and transfer by deed, in fee simple to the Rathfon Reduction Works all of the mining property named in said lease and bond, more particularly described as the Republic and Cecelia lode Turning claims and mining claims and to pay the amount of one certain note for $7,500, given to John Hollis, trustee by the New Republic Co., and the amount of indebtedness represented in legal account credited to D. W. Rathfon trustee on the books of the Rathfon Reduction Works or the sum total of all money advanced by D. W. Rathfon, A. L. Bradley and F. W. Bewley due and not paid on or before March 1st, 1914, and all of which payments shall be made upon the following terms and conditions.
“Thirty per cent of all net smelter or bullion returns mined and milled from the above mentioned mining property shall be immediately paid to the Waverly*119 Exchange Bank for the benefit of the said parties of the first part under the terms of this agreement, on all ore shipped or milled after March 1st, 1914. Net smelter returns shall mean the amount received after freight and treatment charges have been deducted and net bn Hi on returns shall mean the amount received after deducting reasonable milling charges.
“A correct account of all amounts and interest accruing on said John Hollis trustee note, D. W. Rathfon trustee account and the amount due and payable to Perry county, on lease and bond shall be kept and payments made, set aside or credited as follows: Considering at date of each payment the amount due and not yet paid by the company to or for Perry county John Hollis trustee note and D. W. Rathfon trustee account as each a separate unit; then pay to each party or fund its respective pro rata share as represented in the aggregate of all the amounts; excepting always that 5% of such net smelter or bullion returns which are presumably paid to the New Republic Co., shall first be deducted from any payment on the John Hollis note and the balance of note pro rated.
“If any time it shall be necessary for the parties of the first part to advance money to complete payment on lease and bond, then the said party of the second part shall cause to be executed a note and first mortgage on the above mentioned property covered by lease and bond in favor of the said parties of the first part for the whole amount due them; note and mortgage due and payable on or before March 1st, A. D. 1916, and to bear interest at the rate of 10% per annum.
“On March 1st, A. D. 1916, the party of the second part shall assume and pay any remaining balance on said John Hollis trustee note and D. W. Rathfon trustee account, thereby relieving the said party of the first part from any further responsibility in the matter.
“The said party of the second part shall continue to operate and carry on the business of mining the property during the life of this agreement, under the*120 same restrictions, conditions and method of mining as required by the present lease and bond.
“The party of the first part shall at all times protect the party of the second part in legal possession of the, said mining property, and if any payments are due or necessary to be made to Ferry county to fully •protect the company’s interests, then any such amount of payment may be made directly to said Ferry county and the remainder paid to the Waverly Exchange Bank as above mentioned.
“For and in consideration of the above mentioned guarantee, possible payments and services, the said Rathfon Reduction Works, party of the second part, will properly issue to the Waverly Exchange Bank 82,124 shares of the capital stock of said company and deliver same to said bank under’ proper escrow agreement to hold such stock until all of the above mentioned indebtedness shall be paid; and then deliver to the order of the above mentioned parties of the first part.
“Signed and executed at Republic, Wash., this 6th day of January, A. D. 1914.”
Pursuant to the agreement, the appellants, on March 3, 1914, paid to Ferry county, on the purchase price of the property, the sum of $5,000, and on July 22, 1914, paid the further sum of $16,950, the balance due thereon, taking a deed from the county directly to themselves. The Rathfon Reduction Works continued to operate the property for some time longer, paying in royalties to the Waverly Exchange Bank under the provisions of the agreement set forth the sum of $10,-300. Out of this sum, the appellants paid a portion of the Hollis note and certain other obligations, but paid no part thereof on the Rathfon trustee account. On this account there was due on January 6, 1914, the sum of $9,060.23.
The appellants treated the deed from Ferry county to them as security for the sums advanced by them
On the issues as framed, the cause was tried to the court. At the conclusion of the evidence, the court found the deed from Ferry county to the appellants to be a mortgage and security for the sums advanced
On this appeal, tbe appellants assign tbat tbe court erred, (1) in bolding tbat they were obligated to pay tbe Rathfon trustee account; (2) in bolding, if they are obligated to pay such account, that tbe sum due them was tbe amount found by tbe court, tbe amount being less than tbe sum actually due; and (3) in bolding tbat tbe sum of $300 was a reasonable sum to be allowed as attorney’s fees.
Tbe appellants contend, in support of tbe first assignment of error, tbat tbe contract between tbe parties, by its express terms, does not obligate them to pay tbe Rathfon trustee account. This contract we have hereinbefore set out in full. Its perusal will show tbat it is somewhat inartificially drawn. In tbe first paragraph, after tbe introductory matter, it seems to be expressly provided tbat tbe appellants will pay tbe account on or before March 1, 1916. But this is followed by a statement tbat payments “shall be made
We are aware that the trial court rested its conclusion on the acts of the parties, construing those acts to be an interpretation of the contract in accordance with the respondents’ contention. But we can find no justification in the evidence for this conclusion. The appellants’ acts, it seems to us, indicate a repudiation of any obligation with respect to the account rather than an agreement to pay it.
This conclusion, however, does not mean that the appellants are to escape liability entirely with respect to the account. They did not pay thereon the pro rata share the account was entitled to receive of the royalties, and for this they are liable. Nor can it be satisfied by crediting the amount due on the obligation of the respondents to the appellants. In the execution of
In arriving at the amount due, the court credited the entire amount received from the royalties to the Hollis note. Owing to the view the court took of the contract, this was a proper disposition of that fund. Since we hold that a part of this fund is payable to the trustee account, the credit on the Hollis note is too large by the amount rightly payable to the trustee account.
The attorney’s fee allowed was sufficient. The deed, even as construed as a mortgage, did not carry with it an attorney’s fee for its foreclosure other than the attorney’s fee allowed as a part of the statutory costs. The only part of the obligation sued upon which provided for an attorney’s fee in case of suit was the Hollis note, and for suit thereon the attorney’s fee allowed was reasonable.
The decree entered is, therefore, reversed and the cause remanded with instructions to ascertain the amount due on the sums advanced by the appellants to Ferry county, with interest, ascertain the amount due on the Hollis note, and credit thereon the sums paid the Waverly Exchange Bank as royalties for the use of the appellants, less the pro rata share thereof payable to the Rathfon trustee account; require the appellants to pay into court, for the use of the beneficiaries of the trustee account, the last mentioned sum, and when it is so paid, enter a decree of fore
Parker, Mount, Holcomb, and Main, JJ., concur.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.